Deland v. Township of Berkeley

May 30, 2003

VIVIAN DELAND AND ANTHONY J. SCARPA, PLAINTIFFS, AND C.M.R. & CO., A NEW JERSEY PARTNERSHIP, BEDMINSTER ASSOCIATES AND MONOGRAM BUILDING & DESIGN CORP., EXECUTORS AND TRUSTEES FOR THE ESTATE OF EUGENE LADAMOCARSKI AND THE CONNELL COMPANY, PLAINTIFFS-INTERVENORS,v.THE TOWNSHIP OF BERKELEY HEIGHTS, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-APPELLANT, AND DONALD E. STITZENBERG AND MARY ANN STITZENBERG, DEFENDANTS-INTERVENORS, AND SALVIGSEN DEVELOPMENT CO., STANFORD DRIVE BUILDERS, AND K&K DEVELOPERS, RESPONDENTS.

On appeal from Superior Court of New Jersey, Law Division, Union County, Docket No. L-73036-87.

Before Judges Skillman, Cuff and Lefelt.

The opinion of the court was delivered by: Skillman, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 17, 2002

In this Mount Laurel*fn1 appeal, we conclude that a Mount Laurel special master is subject to substantially the same conflict of interest rules as a judge. We also conclude that a municipality which has rezoned property for affordable housing pursuant to a developer's agreement may subsequently acquire the property by eminent domain if the municipality has satisfied its affordable housing obligations and the property's fair market value is determined in accordance with the zoning established pursuant to the developer's agreement.

I.

In 1987, the owners of property in Berkeley Heights brought this Mount Laurel action alleging that Berkeley Heights' zoning ordinance was unconstitutional because it did not provide a reasonable opportunity for construction of the municipality's fair share of affordable housing. In 1989, Berkeley Heights entered into an agreement settling this litigation, which incorporated a plan for compliance with its Mount Laurel obligations that included rezoning of several tracts of land for affordable housing. Respondents Salvigsen Development Co. and Stanford Drive Builders, L.L.C. (Salvigsen) are the successors in interest of the owners of two of those tracts, referred to in this litigation as the"Park Edge" and"Stanford Drive" sites.*fn2

When Berkeley Heights settled this litigation, it entered into developer's agreements with the owners of the properties rezoned for affordable housing. The agreement with Salvigsen's predecessors in title provided for construction of 100 senior citizen residential units on the Park Edge site, 64 of which were required to be affordable to lower income households, and construction of a maximum of 259 units on the Stanford Drive site, all of which originally were to be market rate units. A subsequent amendment to the agreement shifted thirty-two of the affordable housing units from the Park Edge site to the Stanford Drive site. According to Salvigsen's president, the Stanford Drive and Park Edge sites were considered to be a single development project for purposes of Berkeley Heights' compliance plan.

On December 12, 1989, the trial court entered a final judgment of compliance that incorporated the settlement and developer's agreements. The judgment fixed Berkeley Heights'"first round" affordable housing obligations at 261 units and conferred a six-year period of repose from Mount Laurel litigation. On December 14, 1995, the court entered another order that fixed Berkeley Heights'"second round" affordable housing obligation at 190 units, granted the municipality credits for affordable housing units constructed during the intervening six years, and extended its period of repose from Mount Laurel litigation for another six years until December 12, 2001.*fn3

In early 1997, Salvigsen completed construction on the Park Edge site, which consisted of thirty-two affordable senior citizen housing units and sixty-eight market rate units. Later that year, Salvigsen entered into a contract to sell the Stanford Drive site to K&K, contingent upon receipt of all governmental approvals required for development. An appraisal report attached to the contract of sale indicated that remediation of asbestos contamination on the site could cost upwards of $1.7 million. This report also stated that the wetlands permit for the site had expired and that a new letter of interpretation had identified a greater area of wetlands than had been previously indicated.

In September 1999, David Kinsey, the special master the court had appointed to supervise Berkeley Heights' compliance with its Mount Laurel obligations, reported that the municipality had satisfied its obligations under both the 1989 consent judgment and the 1995 order extending Berkeley Heights' period of repose until December 12, 2001.

Shortly thereafter, Berkeley Heights filed a motion to delete the Stanford Drive site from its Mount Laurel compliance plan. Berkeley Heights submitted an affidavit in support of the motion which stated that the site had more extensive wetlands and asbestos contamination than had been previously revealed. This affidavit also indicated that Berkeley Heights had adopted an ordinance, which would become effective upon the court's approval, to rezone the site to"Open Land."

The trial court denied Berkeley Heights' motion to delete the Stanford Drive site from its compliance plan. In a written opinion, the court stated that it would not"allow the Mount Laurel doctrine to be weakened by a Township's amendment to the Compliance Plan and change of zoning where a developer has dealt in good faith to comply with the Compliance Plan to provide Mount Laurel housing."

After the trial court denied Berkeley Heights' motion to delete the Stanford Drive site from its compliance plan, Berkeley Heights filed an action to acquire the site by eminent domain for recreational and open space uses. Berkeley Heights subsequently adopted an ordinance which also authorized the construction of up to thirty-two units of affordable housing on the site to satisfy part or all of its obligations under the"third round" rules of the Council on Affordable Housing (COAH) expected to be adopted shortly.

In addition, Berkeley Heights filed a motion in this action to transfer jurisdiction to COAH. Salvigsen responded by filing a new motion, in which K&K joined,*fn4 to enjoin Berkeley Heights from interfering with development of the Stanford Drive site, including acquisition of the site by eminent domain. Before the return date, Berkeley Heights filed a motion for removal of David Kinsey as special master on the ground that he had a disqualifying conflict of interest, which only recently had come to the municipality's attention, and for reconsideration of the denial of its motion to delete the Stanford Drive site from its compliance plan or, in the alternative, to transfer jurisdiction to COAH.

By oral opinion, the trial court denied Berkeley Heights' motions and granted Salvigsen's motion to enjoin Berkeley Heights from interfering with development of the Stanford Drive site including its acquisition by eminent domain. The court's essential rationale was that Berkeley Heights' planned acquisition of the site was simply an alternative method, devised in response to the court's denial of its motion for deletion of the site from its compliance plan, for Berkeley Heights to avoid its obligations under the developer's agreement with Salvigsen's predecessors in title. Accordingly, the court entered an order on July 6, 2001, (1) denying Berkeley Heights' motion for Kinsey's removal as Special Master; (2) denying Berkeley Heights' motion to transfer jurisdiction to COAH; and (3) granting Salvigsen's motion to enjoin Berkeley Heights' from interfering with K&K and Salvigsen's efforts to develop the Stanford Drive site, including its planned acquisition by eminent domain.

The eminent domain action filed by Berkeley Heights was subsequently dismissed on the basis of the injunction issued in this case.

Berkeley Heights filed separate appeals from the July 6, 2001 order in this case and the order dismissing its action to acquire the Stanford Drive site by eminent domain.*fn5

On appeal, Berkeley Heights argues that the trial court erred in denying its motions to disqualify the special master, permit deletion of the Stanford Drive site from its compliance plan and transfer jurisdiction to COAH. Berkeley Heights also argues that the court erred in enjoining its action to acquire the Stanford Drive site by eminent domain.

We conclude that the special master should have been disqualified from providing recommendations regarding the Stanford Drive site but that there is no need for remand to the trial court for reconsideration of its rulings. We also conclude that the court properly denied Berkeley Heights' motions to delete the Stanford Drive site from its compliance plan and transfer jurisdiction to COAH. However, the court should not have enjoined Berkeley Heights from pursuing an action to acquire the Stanford Drive site by eminent domain.

II.

In Mount Laurel II, the Court authorized trial judges assigned to hear Mount Laurel cases to appoint special masters. 92 N.J. at 281-85. The Court indicated that such a special master is only authorized to make recommendations and may not be delegated decision-making authority:

The master's powers are limited to rendering opinions, proposing findings, issuing recommendations, and assisting the court in other similar ways as it may direct. It is the trial court that must ultimately determine, independently, whether or not the municipality has conformed to its judgment and to the Mount Laurel doctrine. [Id. at 284-85.]

Pursuant to this authorization, early in this litigation the trial court appointed David Kinsey as special master to"oversee [Berkeley Heights'] compliance" with its Mount Laurel obligations. The court continued this appointment in the December 12, 1989 judgment of compliance and the December 14, 1995 order extending Berkeley Heights' period of repose from Mount Laurel litigation to December 12, 2001.

When Berkeley Heights moved to delete the Stanford Drive site from its compliance plan, Kinsey submitted a detailed report which concluded that even though Berkeley Heights had fully satisfied its second round fair share obligations, the motion should be denied. The trial court's opinion denying Berkeley ...

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